South Dakota teens learn entrepreneurial lesson thanks to Peoples State Bank

Northwestern Financial Review, Sep 15-Sep 30, 2003 by Hilgert, Jackie

A group of South Dakota teens recently received a thick slice of business experience courtesy of the forward-thinking bankers at Peoples State Bank, De Smet, S.D. The bank, interested in reaching out to future customers as part of Teach Children to Save Day, partnered with a De Smet High School home economics class to teach students the finer points of business. The freshmen students who participated in the program launched a take-and-bake pizza operation that gave them an insider's look at what it takes to cook up a successful business.

Shawn Bickett, customer service representative at the $51 million Peoples State Bank, brought the idea to Sharry Knock, the school's family and consumer science instructor. "We wanted to do a project where the kids would start a business and sell something," Bickett said. They asked Knock if she had any ideas.

Knock's freshmen class, all participants in a national program called Family, Career and Community Leaders of America (FCCLA), had completed many projects during the year but hadn't yet pursued FCCLA's unit in Financial Fitness. The bank's proposal would qualify for credit in Financial Fitness, plus it would meet a state education content standard for resource management.

"The kids thought the idea was neat," Knock said.

A delegation from the bank visited the soon-to-be entrepreneurs in the classroom. "We went to the school with a packet from the Small Business Administration," Bickett said. The bankers brought only the forms that would be necessary for the scope of the business. Then the education started. "We told them the choice of business was up to them," Bickett said. The bankers gave the students some ideas then told them they needed to build a business plan.

Before proceeding, the students needed to think through some details, like where the company would be based, what the company would be called, who would be the company spokesperson, what the company goals were, how much they thought the product would cost them, how much they would sell it for, and how much profit they thought they'd make.

"We also asked them to think through whether they should collect payment up front or upon delivery," Bickett said. The students decided to collect on delivery, which led to a teachable moment for Bickett. "We asked them, 'what if you have a customer who you make a pizza for and then they don't pay you?'" Bickett recalled. The students' mouths fell open. "Sometimes," Bickett counseled, "you have customers who don't pay."

When the students completed their business plan, they visited Kim Larson, the bank's loan officer. Larson reviewed their paperwork and issued Mama Murphey's pizza company a $225 loan, at 7 percent interest. Bank staff boosted the new business by ordering 25 pizzas from the teenaged entrepreneurs.

The following week, the eight-member staff of Mama Murphey's got busy in the home economics kitchen. "The project generated a lot of excitement at the high school," Knock said. With the aroma of Five-star Pizza Crust wafting through the halls, teachers and students would periodically pop into the classroom to inquire about the project. Soon, news of the teenage pizza company became the talk of the town of 1,200 people.

The students filled bank orders first, then worked feverishly to fill orders that had come in from other teachers and their own families. At the end of the week, 50 pizza orders had been filled and eight tired students learned a valuable lesson on running a business.

The students closed their business and returned to the bank to repay their loan. The bank forgave the interest portion of the loan, satisfied that the lesson learned by the teens would stay with them for life. Mama Murphey's pizza company closed with a profit of $200 on the books. The money was placed in a school trust account. "Sometime in the next three years, the students can apply their share of the profit to an FCCLA leadership camp or some other program," Knock said.

"Sharry was excited because the project helped her meet an education standard required by the state," Bickett said. "We helped them with that."

In the past, the bank had promoted financial education to kindergarteners, but with the success of Mama Murphey's bankers hope to make the business project a permanent part of De Smet High School's family and consumer science curriculum. "At that age," Bickett said, "they learn more and remember more."